AM Best


A.M. Best Revises Outlook to Positive for Lancer Insurance and Upgrades Ratings of North Sea Insurance


CONTACTS:


Marc Liebowitz

Senior Financial Analyst

(908) 439-2200, ext. 5071

marc.liebowitz@ambest.com

Gerard Altonji

Assistant Vice President

(908) 439-2200, ext. 5626

gerard.altonj@ambest.com


Rachelle Morrow

Senior Manager, Public Relations

(908) 439-2200, ext. 5378

rachelle.morrow@ambest.com

Jim Peavy

Assistant Vice President, Public Relations

(908) 439-2200, ext. 5644

james.peavy@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK, N.J. - APRIL 10, 2012 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of “a-” of Lancer Insurance Company (Lancer) (Chicago, IL). Concurrently, A.M. Best has upgraded the FSR to B++ (Good) from B+ (Good) and the ICR to “bbb” from “bbb-” of North Sea Insurance Company (North Sea) (Long Beach, NY). The outlook for North Sea’s ratings is stable.

The revised outlook for Lancer reflects consistently strong operating results that A.M. Best expects will continue into the future. Furthermore, results have generally outperformed the company’s commercial automobile peer composite while showing relatively little volatility over the long term.

The ratings reflect Lancer’s solid market presence in the specialty transportation market, strong risk-adjusted capitalization and favorable return measures over both a five- and ten-year period. Partially offsetting these positive rating factors are the company's heightened expense ratios and history of large stockholder dividends. The ratings could be negatively impacted by a significant decline in risk-adjusted capitalization or operating results.

The upgrading of North Sea’s ratings reflects the capital and operating support received from its parent company, Lancer Financial Group, Inc. (LFG). LFG (which is also the parent company of Lancer Insurance) purchased North Sea in early 2009. Since this acquisition, LFG’s management has been intimately involved in the day-to-day operations of North Sea. Further, LFG infused $3.2 million of additional capital into North Sea in 2011.

North Sea’s ratings reflect its solid risk-adjusted capitalization, focused niche market strategy, solid liquidity and the support received from its parent company. The positive rating factors are offset by the company's modest business scope, rising loss and expense ratios and historically volatile operating results. The ratings could be negatively impacted by persistent unfavorable operating results or a drop in risk-adjusted capitalization.

Lancer is one of the largest specialty passenger transportation insurers of motor coaches, school buses, transit buses, limousines and vanpools in the United States. North Sea specializes in providing commercial multiple-peril, general liability, fire and allied lines insurance to small to medium-sized businesses primarily in New York City and Long Island.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Insurance Holding Company and Debt Ratings”; “Rating Members of Insurance Groups”; and “Understanding BCAR for Property/Casualty Insurers.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.

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